An invoice for $100 has revenue deferred due to unmet payment based contingencies and the
Invoice Accounting Used for Credit Memos profile option is set to Yes. A credit memo of $50 has
been issued against this Invoice. Explain how revenue accounting will occur.
A.
Unearned revenue will be debited for $50.
B.
Earned revenue will be credited for $50.
C.
Unearned revenue will be credited for $100.
D.
Earned revenue will be debited for $50.
Explanation:
If you issue a credit memo against an invoice that had revenue automatically deferred upon import,
then the impact of the credit memo differs depending on the original reason for the revenue
deferral.
Payment-based contingencies: If revenue on this invoice was deferred due to unmet payment-based
contingencies, then Receivables always debits the unearned revenue account for the full amount of
the credit memo, according to the initially assigned revenue scheduling rules.Modifying Invoices with Deferred Revenue: Explained